Transformative Carbon Asset Facility

The Paris Agreement aims to limit global warming caused by man-made climate change to well below two degrees Celsius. To achieve this goal, global greenhouse gas emissions must be rapidly reduced over the next few decades and carbon neutrality must be achieved in the second half of the century.

These ambitious goals can only be achieved through close international cooperation to minimise greenhouse gas emissions. Given the growing emissions, especially in emerging economies, the call for broad-based climate change mitigation measures in developing countries are of key importance. Market-based mechanisms can play a central role.

The World Bank’s Transformative Carbon Asset Facility (TCAF), launched by Germany in cooperation with Norway, Sweden and Switzerland – and which both the UK and Canada have since joined – supports developing countries in establishing and implementing market-based climate change mitigation mechanisms by providing results-based financing for proven emission reductions achieved at sectoral level. Using public funds to the tune of 500 US dollars, private industry is to be mobilised to generate climate investment worth over two billion US dollars.

The TCAF will fund emission reduction activities using broad-based programmes to overcome the project-based approach, achieving a transformative effect in partner countries. The funded measures are integrated into the respective national climate change strategies, thus boosting national climate change mitigation effort and securing a lasting contribution to achieving climatically sound sustainable development.

TCAF activities will be closely linked to the process under the international climate change regime: transformative experience is to be transferred to other regions and will also contribute to implementation of the Paris Agreement.

Following the TCAF’s launch at the climate change conference in Paris in 2015, implementation plans and legal documentation were finalised in cooperation with the participating countries. The TCAF was subsequently approved by the World Bank and went into operation in March 2017. The first potential TCAF activities are currently being evaluated. It is expected that the first contracts will be signed with partner countries in 2018.